Diamond & Specialty Minerals Summary - 21st

Diamond & Specialty Minerals Summary for Oct. 21, 2019

2019-10-21 18:57 ET - Market Summary

by Will Purcell

The diamond and specialty minerals stocks box score on Monday was a poor 57-87-156 as the TSX Venture Exchange rose fractionally to 543 while polished diamond prices inched lower. Patrick Power's Arctic Star Exploration Corp. (ADD) traded busily but went nowhere, closing unchanged at two cents on 2.4 million shares. There has been no news from its Timantti project in Finland since July.

Star Diamond Corp. (DIAM), Ken MacNeill and George Read's eternal Saskatchewan diamond promotion that has been perpetually stalled near 20 cents for the past seven years, added one-half cent to 20.5 cents on 125,000 shares. The company's loyal retail shareholders, many of them believers since the late 1990s, are hoping that results of a big bulk sampling program at the Star pipe in central Saskatchewan will vindicate their faith in the company's work in the mid-2000s that suggested the mammoth pipe was economic.

The results of Star Diamond's earlier tests were enough to entice Rio Tinto PLC into an option deal, but not enough that Rio would proceed without a detailed check on its partner's data. If the grade and diamond values of the 12,000-tonne test pan out, Rio will complete a big test of the Orion South pipe next year, which could blast Star's stock free of its 20-cent shackle. A good result from Star could also auger well for another of Star Diamond's projects, the big Buffalo Hills property in Northern Alberta, and for another of Star's co-venturers, Randy Turner's Canterra Minerals Corp. (CTM: $0.02).

Canterra holds a 33-per-cent interest in the Buffalo Hills project, as does Star Diamond. The third co-venturer, Encana Corp. (ECA: $5.29), holds the remaining 34-per-cent interest. Star and Canterra acquired their interest from the husk of Ashton Mining of Canada Inc. in 2007 for $17.5-million in cash and stock, plus the promise of $15-million in additional work.

The Buffalo Hills project has had plenty of ups and even more downs over the past quarter century. Ashton Mining captivated the market in the late 1990s with a series of kimberlite finds, but a mini-bulk test of the best of them was viewed as a crushing disappointment, when 479 tonnes of kimberlite from the K-14 pipe produced just 56.45 carats of diamonds, a grade of just under 12 carats per hundred tonnes. Previously, a 44.9-tonne test had delivered 7.8 carats, or about 17.4 carats per hundred tonnes.

Several other pipes produced intriguing but ultimately discouraging grades. The K-6 pipe produced 16.3 carats from 231.9 tonnes of kimberlite, seven carats per hundred tonnes, while the K-91 pipe managed a grade of nearly 13 carats per hundred tonnes from 35.9 tonnes. Another of the initially ballyhooed pipes, K-11, tested at 4.4 carats per hundred tonnes. One outlier, discovered in the early 2000s by Ashton, was K-252, where a 22.8-tonne test averaged a hefty 55 carats per hundred tonnes. Unfortunately, that pipe is tiny by comparison and never got a larger look.

Still, the other pipes are large, and the grades look intriguingly like the those of Star's Saskatchewan pipes. That was a key reason that Mr. Turner and Mr. MacNeill got together 12 years ago to acquire the Buffalo Hills project. Unfortunately, it wound up in mothballs after the Great Recession of 2008 snuffed out interest in diamond exploration, and there it remains today. Still, if Rio Tinto deems the Star and Orion South pipes to be economic, it could trigger a revival of the Buffalo Hills play.

Sandy MacDougall and Arthur Brown's Alba Minerals Ltd. (AA), up one cent to 3.5 cents on 18,000 shares when it last traded on Friday, is falling from the TSX-V onto the CSE. (It's not a big drop -- more like a stumble over uneven concrete in your basement.) Mr. MacDougall, chairman and a former Canaccord Capital Corp. broker, did his best to soldier on, offering an update on the company's drilling plans for its lithium prospects in Nevada.

Nearly lost in the news is the fact that one of Alba's prospects, Muddy Mountain, is now kaput. Mr. MacDougall says that because of the government shutdown, getting approval for a drill program was "greatly delayed." He is referring to the budgetary battles last year between President Trump and Congress, but it is not clear what that had to do with the local Bureau of Lands and Mines dragging its feet on approval for a modest backpack drill program. In any case, it offered Alba an easy out on an option arrangement that it had acquired in mid-2018.

In fact, the only drilling related to Alba is occurring on the Zeus property, owned by Noram Ventures Inc. (NRM), which closed unchanged at 7.5 cents on 100,000 shares today. Alba owns 3.8 million of Noram's 36.5 million shares, enough, apparently, to give Mr. MacDougall a sense of ownership in the project. This fourth phase of drilling at Zeus is expected to lead to a preliminary economic assessment. The first three phases led to an inferred resource of 330 million tonnes averaging 858 parts per million (ppm) lithium, or, based on a 900-ppm cut-off, 145 million tonnes at 1,145 ppm lithium.

Mark Brennan's Vanadium One Iron Corp. (VONE), down one cent to seven cents on 10,000 shares, is offering a mix of flow-through shares at 10 cents and regular shares at seven cents, enough of them to raise $1.2-million. Cliff Hale-Sanders, president and chief executive officer for the past three weeks, is girding for a tough slog -- he says that his company "may close the offering in multiple tranches" -- and a cursory glance at the company's stock chart suggests it will be a battle to raise the cash at the offered prices.

Vanadium One wants the cash for further work on its Mont Sorcier vanadium and iron project, southeast of Chibougamau in Quebec. The company, then led by Martin Walter, rolled out a resource estimate for Mont Sorcier this spring, listing over 600 million tonnes of rock that has the potential to yield an indicated 35 million tonnes of concentrate, and another 178 million tonnes inferred, at about 65 per cent iron, 0.6 per cent vanadium oxide and 1.6 per cent titanium oxide.

Paul Gill's Lomiko Metals Inc. (LMR), unchanged at 3.5 cents on 30,000 shares, is struggling to raise $2.75-million through a placement that it began in August. Lomiko is offering 20 million regular shares at five cents and 35 million flow-through shares, also at five cents. Mr. Gill does not say how the fundraising is going, but he is asking for an extension from the regulators. The cash is for a new resource estimate covering the Refractory zone of its La Loutre graphite project in Quebec, a preliminary economic assessment of the project and for continuing exploration and development at La Loutre next year.